Occidental Petroleum Corp., the largest onshore crude producer in the continental U.S., said its board has started a search for a successor to President and Chief Executive Officer Stephen Chazen.
Occidental’s board has formed a committee to work with an executive search firm, the Los Angeles-based company said today in a statement after the close of markets. The company said it will review both internal and external candidates, and doesn’t have a time table for choosing a successor.
“Succession planning and best corporate governance practices have been a high priority for the board over the past number of years,” Occidental Director Margaret Foran said in the statement.
Occidental’s stock has lost more than 20 percent of its value since Chazen, now 66 years old, succeeded Ray Irani as CEO in May 2011. Irani, who serves as executive chairman, will retire at the end of 2014, the company has previously said.
The oil producer has been plagued by delays and ballooning costs at its California oilfields, prompting Chazen to institute cost-saving measures such as simplified well designs and cheaper drilling methods.
The company reported fourth-quarter profit last month that beat analysts’ estimates as domestic production reached a record high for the ninth consecutive quarter. Quarterly results included a $1.1 billion writedown for the value of natural gas assets.
Occidental may be considering separating its chairman and CEO roles if Chazen steps into the executive chairman position when Irani retires, Brian Youngberg, an analyst at Edward Jones in St. Louis, said in a telephone interview.
“The company is a little more challenged now,” said Youngberg, who rates the company’s shares a “buy” and doesn’t own any. “They have some cost pressures, which they are addressing. The stock has lagged some of its peers.”
Strengthening its corporate governance may help ward off a move by an activist investor, he said.
“We have seen increased activity with activist investors with companies who have lagged their peers,” Youngberg said. “The thing an activist may look for would be a change in executive compensation and separation of the CEO and chairman,” he said.
Occidental did not immediately return a phone call and e-mail seeking comment.
Occidental said today it had increased the company’s dividend 18.5 percent to an annual rate of $2.56 a share, from a previous rate of $2.16 a share. The company fell 0.03 percent to $86.91 in New York.
Occidental has been criticized by investors in the past for paying its top executives too highly. Last March, Occidental reduced Chazen’s compensation package after facing complaints about Irani’s CEO salary in 2010.
Chazen received $31.7 million in 2011 compared with $38.1 million the year before when he was president, according to a filing with the U.S. Securities & Exchange Commission. Chazen’s compensation included $1.27 million in salary, a $1.34 million bonus and $28.6 million in cash and stock awards.
Irani received $49.8 million in cash, stock and other benefits versus $76.1 million in 2010, when his compensation nearly doubled, making him the highest-paid CEO in the energy industry.